Fri October 25, 2013

Poverty Toppled Two Egyptian Governments And Still Persists

It's been nearly three years since Egyptians rose up against autocratic rule and one fact of life there hasn't changed. Most Egyptians are poor and they're getting poorer. Economic social justice was a big demand of protesters in 2011 and then again this summer. That's when massive crowds took to the streets leading to the ouster of Islamist President Mohamed Morsi. And economists say if Egypt's new leaders don't do something to address the country's poverty problem, they'll face similar unrest.

NPR's Leila Fadel reports from Cairo.

LEILA FADEL, BYLINE: At an outdoor market in central Cairo, Umm Nasser's vegetable stand bursts with the colors of purple eggplants, green peppers and red tomatoes. She weighs out produce on a scale for her gaggle of customers.

UMM NASSER: (Foreign language spoken)

FADEL: She says business is bad, really bad. People just can't afford the soaring prices of the produce, she says, pointing out all the vegetables that have rotted because no one's buying them. But she says any government attempt to fix prices at lower levels isn't going to work. Last month, the supply ministry announced plans to impose mandatory commodity prices on fruits and vegetables. If they enforce the plan, Umm Nasser says, she and other vegetable vendors will make no money and the black market will grow.

NASSER: (Foreign language spoken)

FADEL: She says, wholesale providers will hide the good produce and sell us bad produce and then, turn around and extort lots more money for the fresh stuff that customers actually want. Economists say measures like this one by the military-backed interim government are aimed at appeasing the population during a time of political unrest. Supporters of ousted President Mohamed Morsi and his Muslim Brotherhood have been protesting for more than 100 days. Amid continuing violence, the country remains divided and under a state of emergency. And at the same time, prices are soaring, unemployment is growing and economic social justice is still a distant dream.

Samer Atallah, at the American University in Cairo, assesses the government's approach to the economic situation.

SAMER ATALLAH: It's among a program of multiple measures they're trying to do in order to ease a bit the economic strain on the Egyptian households.

FADEL: This week, the finance ministry announced it would spend more on a planned stimulus package, $4.3 billion, and would implement a minimum wage by early next year. The government has something of a lifeline, Atallah says, in the form of $12 billion in aid from oil-rich states on the Arabian Peninsula, announced after the military overthrow of Morsi in July. The aid will help in the short-run but Atallah says, ultimately, the government isn't addressing Egypt's broken economy.

ATALLAH: It can give us maybe few months until it runs out.

FADEL: Nearly three years of political turmoil has scared away tourists and foreign investors. Almost a third of Egypt's budget is spent on an inefficient food and fuel subsidy system as the country continues to spend more than it earns. And about half of Egyptians live on or below the poverty line.

ATALLAH: So we have all of these ingredients in a burning pan that are waiting to explode whenever a crisis comes up.

FADEL: And that means the military backed government could soon face renewed protests because people can't afford to eat. Wael Ziada is the head of research at EFG-Hermes, one of Egypt's largest investment banks.

WAEL ZIADA: As time goes on, I have much less conviction that this government will achieve anything more significant than the previous government or the government before it did achieve.

FADEL: He says the new leadership is more capable of dealing with the economic problems but there still are no serious steps towards economic reform.

ZIADA: Part of that has to do with the difficulty of this period from a political standpoint and the fact that any economic restructuring plans would need a lot of support and obviously compromise.

FADEL: For now, stability is tantamount. Economic reforms would mean that the government would have to cut subsidies and reform the aging bureaucracy with millions of people on the payroll - something a lot of Egyptians won't like. For now, the military is riding a wave of popular support, economists say. This new government just doesn't want to rock the boat. Leila Fadel, NPR News, Cairo. Transcript provided by NPR, Copyright NPR.